New Delhi — The Central Board of Direct Taxes (CBDT) is set to intensify its efforts to combat tax evasion by leveraging data analytics and artificial intelligence (AI) to identify discrepancies in income reporting, as stated by Chairman Ravi Agrawal. This initiative aligns with the upcoming new income tax law expected to be approved by Parliament in the current session.
With access to over 6.5 billion domestic digital transactions and information exchange with overseas agencies, the Income Tax Department is well-positioned to detect evasion more effectively, according to Agrawal. He reassured that the powers allowing tax authorities to access digital records are strictly limited to search and seizure operations where taxpayers refuse to share information, and are not intended to intrude on ordinary taxpayers.
Chairman Agrawal noted that the next phase of AI usage will be more intensive, with reporting agencies providing more mature data for detailed analytics to identify tax evaders and target them effectively. The Income Tax Department has been proactively providing taxpayers with information about their financial transactions to encourage voluntary compliance. Since April 1, 2022, approximately 11 million updated returns have been filed, resulting in an additional tax collection of over ₹11,000 crore.
A recent nudge campaign led to the withdrawal of tax deduction claims worth ₹963 crore and the payment of ₹409.50 crore in additional taxes between April 1, 2023, and June 18, 2025. A total of 30,161 taxpayers declared ₹29,208 crore of foreign assets and ₹1,089 crore of foreign income between November 2024 and March 31, 2025.
Agrawal emphasized that the quality of information received under various information exchange agreements has improved over the past two years, aiding in identifying taxpayers with foreign assets. The department is focusing on regular updates as technology evolves to address areas such as the dark web, crypto, and other new forms of transactions. India is actively participating in global discussions on the Crypto-Asset Reporting Framework and has already enabled information exchange through regulation.
Digitization has significantly expanded the taxpayer base to 90 million in FY25 from 30 million in FY14. Gross refunds issued have increased by 474%, from Rs 83,008 crore in FY14 to Rs 4.76 lakh crore in FY25, with the average refund processing time dropping to 17 days from 93. About 22% of income tax returns were processed within a day, and 26% within two to seven days. The department is compiling annual data on about 6.5 billion transactions to prepare pre-filled forms for about 400 million taxpayers, with 99% agreeing with the provided information.
With the Parliament select committee submitting a report on the new income tax bill, the real work for the department begins. Agrawal stated that the bill is the first step, followed by associated rules, forms, and capacity building. The immediate focus is to prepare the department for the massive transformation expected with the new law taking effect on April 1, 2026.